© Reuters
Written by Noreen Burke
Investing.com – With a long-awaited rate hike from the Federal Reserve, investors may be looking to see if stocks are poised for a sustainable recovery or if more turmoil awaits. The war in Ukraine will remain in focus, with markets continuing to watch the headlines. Oil markets are calmer but concerns about supply shortages remain on top. The economic calendar is light but there will be two appearances from Federal Reserve Chairman Jerome Powell during the week, while the Eurozone and the UK will release PMI data. Here’s what you need to know to start your week.
- Stocks to keep going up?
US stocks returned by storm last week after the Federal Reserve raised its first interest rate hike since 2018 along with an encouraging assessment of the US economy.
Wall Street’s three major indices made their biggest weekly percentage gains since early November 2020 with a 5.5% rise, a 6.2% addition and an 8.2% rise.
But investors now have to wrestle with the question of whether the Fed will be able to fight high inflation without pushing the economy into recession.
JPMorgan predicted last week that the S&P 500 would end the year at 4900, nearly 10% higher than Friday’s close, saying that markets “have now cleared up a long-awaited Fed hike with policy likely to be more strictly.”
But fears of high inflation, higher commodity prices and few signs of an end to the war in Ukraine still cast a shadow over investor expectations.
- Ukraine war
Market watchers will continue to monitor the course of the war in Ukraine and the headlines may continue to rattle the market in the coming week. Diplomatic efforts continue even as Russian strikes on Ukrainian cities continue.
US President Joe Biden will join Wednesday’s NATO meeting as well as the midweek EU summit in Brussels, aiming to foster new cohesion with European allies.
The West risks divisions with China and India, which did not condemn the Russian invasion of Ukraine.
On Friday, Biden warned his Chinese counterpart, Xi Jinping, of “consequences” if Beijing provided material support for Russia’s invasion of Ukraine.
China did not condemn Russia’s actions, although it did express concern about the war.
China’s vice foreign minister said on Saturday that Western sanctions against Russia are “disgraceful”.
- Fedspeak
On Monday, Federal Reserve Chairman Jerome is set to speak about the economic outlook at the annual conference of the National Association of Business Economics, less than a week after the Fed began what is expected to be a strong monetary-policy tightening cycle.
On Wednesday, Powell is scheduled to participate in a virtual panel discussion at a summit hosted by the Bank for International Settlements.
Several Fed officials are also scheduled to deliver speeches during the week, including New York Fed President John Williams, San Francisco Fed President Mary Daly, Cleveland Fed President Loretta Mester, and Fed Chair In Minneapolis Neil Kashkari, Federal Reserve Governor Christopher Waller, and Chicago Fed President Charles. Evans.
The US economic calendar is relatively light and will contain reports on, as well as, as well as data.
- oil prices
Last week, oil prices recorded a second weekly decline in a row, as they ended the week down about 4%.
Oil prices were on a fast track, hitting 14-year highs two weeks ago, buoyed by a supply crunch from traders shunning Russian barrels and dwindling oil stocks.
But prices were pressured by concerns about demand after an increase in coronavirus cases in China, while stalled nuclear talks with Iran were a key market card.
The International Energy Agency said oil markets could lose 3 million barrels per day of Russian oil from April. That loss would be much larger than the expected drop in demand resulting from higher fuel prices, the agency said.
The Ukrainian crisis has exacerbated the problem of limited production capacity. The International Energy Agency said the world is set for a supply shortfall of 700,000 barrels per day in the second quarter.
- Eurozone, UK PMI
Britain’s Treasury is due to publish PMI data for March, which will serve as a primary test of the types of impact from the war in Ukraine.
Overall, PMIs held above the 50 mark that separates contraction from expansion. But after the ZEW index showed German investor sentiment in March, a recession in the eurozone’s largest economy cannot be ruled out.
Markets have ignored the decline in the ZEW index, focusing instead on central banks’ efforts to curb inflation.
But at a time when rising energy costs are putting pressure on household spending, a pessimistic set of PMIs may sound alarm bells.
–Reuters contributed to this report
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